The U.S. Agency for International Development (USAID) has ceased all assistance to Palestinians in the occupied West Bank and Gaza, a U.S. official said on Friday.

The decision was linked to a Jan. 31 deadline set by new U.S. legislation under which foreign aid recipients would be more exposed to anti-terrorism lawsuits. The deadline also sees the end of about $60 million in U.S. aid for the Palestinian security forces, whose cooperation with Israeli forces helps maintain relative quiet in the West Bank.

Congress' Anti-Terrorism Clarification Act (ATCA) empowers Americans to sue foreign aid recipients in U.S. courts over alleged complicity in "acts of war."

The Palestinian Authority declined further U.S. funding over worries about its potential legal exposure, although it denies Israeli accusations that it encourages militant attacks.

"At the request of the Palestinian Authority, we have wound down certain projects and programs funded with assistance under the authorities specified in ATCA in the West Bank and Gaza," a U.S. official told Reuters on Friday. "All USAID assistance in the West Bank and Gaza has ceased."

It was unclear how long the cessation would be in effect. The official said no steps were currently being taken to close the USAID mission in the Palestinian territories, and no decision had been made about future staffing at the USAID mission in the U.S. Embassy in Jerusalem.

The decision came a year after Washington decided to cut hundreds of millions of dollars of aid to Palestinians. The Trump administration's decision last year to cut more than $200 million in development aid to the Palestinians is forcing NGOs to slash programs and lay off staff as the effects ripple through a community that has spent more than two decades promoting peace in the Middle East.

The U.S. government's development agency, USAID, has provided more than $5.5 billion to the Palestinians since 1994 for infrastructure, health, education, governance and humanitarian aid programs, all intended to underpin the eventual creation of an independent state.

Much of that aid is channeled through international NGOs, which were abruptly informed of the cuts last summer and have been scrambling to keep their programs alive.

President Donald Trump says the USAID cuts are aimed at pressuring the Palestinians to return to peace talks, but Palestinian officials say the move has further poisoned relations after the U.S. recognized Jerusalem as Israel's capital last year. The aid groups, many of which have little or no connection to the Palestinian Authority, say the cuts hurt the most vulnerable Palestinians.